The Federal Reserve has reacted swiftly to the COVID-19 pandemic. It has resuscitated many of its programs from the last crisis by lending to the financial sector, which we refer to as "Wall Street QE." The Fed is now proposing to also lend directly to, and purchase debt directly from,...

The Federal Reserve (Fed) is tasked with maintaining price stability and achieving maximum employment. In practice, over the last decades the Fed has sought to achieve its objectives primarily through the manipulation of a short-term inter-bank interest rate, the federal funds rate (FFR).At the...

This paper develops a New Keynesian model featuring financial intermediation, short- and long-term bonds, credit shocks, and scope for unconventional monetary policy. The log-linearized model reduces to four key equations -- a Phillips curve, an IS equation, and policy rules for the short-term...

This paper studies the implications of household heterogeneity for the effectiveness of quantitative easing (QE). We consider a heterogeneous agent New Keynesian (HANK) model with uninsurable household income risk. Financial intermediaries are subject to an endogenous leverage constraint that...

This paper studies the implications of household heterogeneity for the effectiveness of quantitative easing (QE). We consider a heterogeneous agent New Keynesian (HANK) model with uninsurable household income risk. Financial intermediaries are subject to an endogenous leverage constraint that...

Yes! We study the substitutability between conventional monetary policy based on the adjustment of a short term policy interest rate with quantitative easing (QE). We do so in a four equation New Keynesian model featuring financial frictions that allows QE to be economically relevant. We...